For the week, the Dow lost more than 300 points, or 3.6 percent, marking its second down week out of the past 10. The Nasdaq declined 3.4 percent, snapping its nine-week winning streak. The S&P tumbled 5 percent, dropping into negative territory for the year.

Still, all three major indexes are up double-digit percentages from their March 9 lows.

Financials were the worst-performing sector this week but American Express had the most positive impact on the Dow, up nearly 5 percent. General Motors was the Dow's biggest percentage decliner, down 32 percent this week, as the automaker started sending out notices to shutter 1,100 dealerships. Consumer staples were the best-performing sector this week, off just 0.6 percent.

Crude oil ended the week at $56.34 a barrel, but did trade above $60 this week, a level not seen since November.

In today's economic news: A gauge of manufacturing in New York State showed the industry's pace of contraction slowedin May, while nationwide, industrial production fell 0.5 percent in April, the slowest pace in six months.

Consumer sentiment snapped back to its highest level since September, the peak before the market meltdown.

Consumer prices were unchanged in April, as expected, but recorded their largest 12-month drop since 1955, as sluggish consumer demand limited companies' pricing power.

JCPenney also disappointed the market, posting earnings of 11 cents per share that actually were a shade above Wall Street expectations. But the company lowered its guidance for the year ahead. Its shares fell just 0.4 percent.

The dollar gained against the euro after growth domestic product data out of several countries showed Europe fell deeper into recessionin the first quarter. Germany's economy sank 3.8 percent, while France's dipped 1.2 percent in the first quarter.

"Fear and greed [have] a huge part to play right now with everyone desperate to call the bottom of the market but absolutely terrified that these so-called green shoots will quickly turn into dead weeds," said Andrew Turnbull, senior sales manager at ODL Securities told Reuters.

Credit-card data wasn't nearly as encouraging as some of the other data points this week, showing defaults hit a record in April. Citigroup and Wells Fargo posted double-digit loss rates as more consumers were unable to pay their bills.

Most other bank stocks were also lower as investors took a breather from the sector's recent run. , Bank of America fell 5.7 percent and JPMorgan skidded 1.8 percent.

But Sun Trust ticked higher after the bank slashed its dividend to a penny and said it plans to sell up to $1.25 billion in common stock. Federal regulators had ordered the company to find $2.2 billion in new capital.

Tech stocks succumbed to the selling pressure but outperformed the broader market as investors continued to play some names in the cyclical trade. Electronic Arts , Sandisk and Research In Motion were some of the biggest percentage gainers on the Nasdaq 100.

Emulex rose 0.3 percent after the company's board of directors rejected a $9.25 a share offer from Broadcom , called the offer grossly inadequate and said it significantly undervalued the company's long-term prospects. Broadcom lost 0.7 percent.